March 12, 2020 / 3:06 PM / 17 days ago

EMERGING MARKETS-Latam FX hit new lows, Brazil stocks sink 15%

    * Mexico's peso drops 4%, Colombia peso at 4,030
    * Oil prices slide
    * Brazil's Bovespa index set for worst day in  more than 2
decades
    * Azul, LATAM Airlines dive; to cut international flights  

    By Susan Mathew
    March 12 (Reuters) - The Mexican peso plunged 4% to new lows
on Thursday, as did other Latin American currencies, while
regional stocks nosedived after Washington's surprise move to
curb travel from Europe exacerbated fears that the coronavirus
pandemic would slam global growth.
    U.S. President Donald Trump imposed sweeping restrictions on
travel from Europe on Thursday and also unveiled economic steps
to counter the impact of the pandemic which disappointed
investors as they were light on details.

    A rebounding dollar also added to the mix as investors
scrambled for the greenback as swap spreads on major currencies
blew out and the euro dropped after the European Central Bank
announced more stimulus to fight the coronavirus impact but held
on rates.
    As oil prices slid, crude exporter Mexico's peso
touched 22.86 to the dollar and was set for its worst day in
more than three years, while Colombia's currency gave up
3.5% to hit new lows of 4,030.94. 
    "It's a risk off sentiment triggered by Trump's decision to
ban flights which sends signals that we may get more draconian
measures in the U.S. to contain the virus. That has hit oil
prices," said Edward Glossop, a Latin America economist at
Capital Economics.
    Brazil's real breached 5 to the dollar for the first
time. The central bank announced an auction of $2.5 billion in
the spot market. 
    "It's worth mentioning that the (Brazilian) central bank
still has ample instruments to intervene in the FX market with
international reserves amounting $362 billion at the end of Feb.
20," said EM strategists at Citi Research.
    As the copper price fell to three-year lows, the currency of
the world's largest copper producer, Chile, fell 1.2%

    In line with a plunge in equity markets worldwide, an index
of regional stocks tanked 13% to four-year lows.
Brazilian stocks slumped 15% after trading resumed
following an automatic halt once it breached 10%. 
    Sao Paulo's Bovespa index was set for its worst day since
1998. Miner Vale shed 16%, while preferred shares of
oil firm Petrobras tumbled 20%.
    Carrier Azul dropped a whopping 34% after it
became the first Latin American carrier to implement a hiring
freeze and put some workers on unpaid leave amid collapsing
demand.
    LATAM Airlines followed suit, saying it will cut
capacity on international flights by up to 30%, sending its
shares down 13%. The stock was on course for its biggest one-day
drop since 2002. 
    Chile's main stock index fell 5.2% to a four-year 
low.
    Mexican stocks slid 7% to their lowest in more than
eight years, while Colombia's COLCAP index slid 6.8%
as oil firm Ecopetrol dived almost 11%. 
    
    Key Latin American stock indexes and currencies at 1440 GMT:
   Stock indexes           Latest    Daily %
                                     change
 MSCI Emerging Markets       886.43    -6.36
                                     
 MSCI LatAm                 1702.29   -13.97
                                     
 Brazil Bovespa            72026.68   -15.43
                                     
 Mexico IPC                35969.98       -7
                                     
 Chile IPSA                 3720.03    -6.52
                                     
 Argentina MerVal          28516.67   -9.239
                                     
 Colombia COLCAP            1203.31    -7.11
                                     
                                            
      Currencies           Latest    Daily %
                                     change
 Brazil real                 4.8810    -3.30
                                     
 Mexico peso                22.3378    -4.29
                                     
 Chile peso                   852.4    -1.99
                                     
 Colombia peso              4030.94    -3.54
                                     
 Peru sol                    3.5488    -0.90
                                     
 Argentina peso             62.7600    -0.14
 (interbank)                         
                                     
 
 (Reporting by Susan Mathew in Bengaluru
Editing by Frances Kerry)
  
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